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TMI Blog2022 (7) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... ts on which there may conceivably be two opinions. In view of the above, as is evident from the facts available on record, the issue of prior period expenses, inter alia, on which rectification u/s 154 was done by the AO in the present case is open to divergent views and the same requires long drawn process of examination, therefore, we are of the view that rectification order passed u/s 154 on this issue clearly falls beyond the ambit of expression mistake apparent from the record . Consequently, ground no.2, raised in assessee s appeal is allowed. - Shri Sandeep Singh Karhail, Judicial Member And Shri Gagan Goyal, Accountant Member For the Assessee : Shri Satish Modi. For the Revenue : Shri Ashish Kumar, Sr. AR. ORDER PER SANDEEP SINGH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal is against rectification order passed by the Assessing Officer under section 154 of the Act which was upheld by the learned CIT (A) vide impugned order. 4. The brief facts of the case pertaining to the issue, as emanating from the record, are: The assessee is engaged in the business of manufacturing and trading of RMC Mix. For the year under consideration, the assessee e filed its return of income on 29/09/2011, declaring total loss of Rs. 13,52,913, and book profit of Rs. 18,82,253, under the provisions of section 115JB of the Act. The case was re opened after recording the reason and notice under section 148 of the Act was issued to the assessee. The Assessing Officer, vide order dated 13/02/2015, passed under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany is recomputed as under: 5. In appeal, the learned CIT(A), vide ex-parte impugned order, dismissed the appeal filed by the assessee, by observing as under: 7.1 During the course of appeal proceedings, four notices have been issued to the appellant to furnish written submissions, as per grounds of appeal. The appellant has not med any written submissions but filed letter dt. 07.01.2021 seeking adjournment in response to notice dt. 17.12.2020. Another notice has been issued on 20:06:2021 there was no compliance from the appellant to this notice also it is presumed that the appellant has no explanation / submission to offer in support of cam of prior period expenses. It is settled that the deductions can be permitted in respect of only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as well as the learned CIT (A) and, therefore, the lower authorities were justified in making the additions. 9. We have considered the rival submissions and perused the material available on record. In the present case, the proceedings resulting in the present appeal is pursuant to the order passed by the Assessing Officer under section 154 of the Act. After passing the assessment order under section 143(3) r/w section 147 of the Act, the Assessing Officer found that the assessee has debited prior period expenses of Rs. 17,72,713, to the Profit Loss Account and Rs. 60,243, on account of loss on sale of RMC, which according to the Assessing Officer are not allowable. We find that the Co ordinate Bench of the Tribunal, on similar issue in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be amended. In other words, a debatable matter does not come within the purview of sec. 154 of the Act. 14. In the present case, the assessee debited a sum of Rs. 721.15 lakhs in the profit loss account under the head Prior period expenditure . Whether prior period expenditure claimed in the profit loss account is allowable in the year in which it is debited in the Profit Loss Account, it is to be determined as to when the expenses were actually crystallized. Merely because the expenses related to the prior period, that by itself cannot be a basis to hold that the prior period expenses debited in the profit loss account are prima facie not allowable unless and until an enquiry has been made to verify and ascertain as to when these expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense relates to a transaction of an earlier year, it does not become a liability payable in the earlier year, unless it can be said that the liability was determined and crystallized in that year on the basis of maintaining accounts on the mercantile method. In each case, where the accounts are maintained on the mercantile basis, it has to be found in respect of any claim, whether such liability was crystallized and quantified during the relevant previous year so as to be required to be adjusted in the books of account of that previous year. If any liability, though relating to the earlier year, depends upon making a payment and its acceptance by the assessee and such liability has been actually claimed and paid in the later years, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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